Trump Tariffs To Hurt Nike, Under Armour, VF: Are Ralph Lauren, Foot Locker Safer Bets?

Brands that rely on the Asia-Pacific region to produce apparel goods are likely trying to find ways to mitigate the impact of President Donald Trump‘s reciprocal tariff plan,

The average pre-mitigation headwinds to gross margin and EPS are 670bps and 65%, respectively.

On the worse end of the EPS-impact spectrum, Needham & Co.’s analyst Tom Nikic noted Under Armour, Inc. (NYSE:UAA), VF Corp. (NYSE:VFC), and Nike, Inc. (NYSE:NKE). Those companies have relatively low margin structures given their recent struggles.

As a result, these three companies have little “cushion” to absorb incremental tariffs. Nikic noted that the pre-mitigation headwinds will wipe out the companies’ EPS power.

Also Read: Tariffs To Impact End Demand: Goldman Sachs Analyst Expects Drag On Corporate Spending, Hiring

The least impacted brands in Nikic’s coverage? Ralph Lauren Corp. (NYSE:RL) and Foot Locker, Inc.’s (NYSE:FL). The company has a significant international presence and high-margin P&L. This will likely result in just a 20-25% pre-mitigation headwind to EPS, he predicts.

Nikic also noted that Ralph Lauren has a strong recent track record of raising prices (eight straight years of rising average unit retail prices in the DTC channel). The analyst is confident that they can do so if necessary.

Nikic also highlighted Foot Locker. Suppliers import the sneakers they sell, so they have very little direct exposure. They have an indirect risk of being forced to “share in the pain” of their tariff-addled suppliers, but at least they are one step removed from the tariffs themselves.

The analyst also does not expect to see an in-sourcing of manufacturing to the U.S., as it would be highly challenging to build the manufacturing capacity in the U.S. and to find labor with enough expertise to work in U.S.-based apparel/footwear factories.

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